You make some good points about renting vs. owning. I still think buying a place on a wing and a prayer – in this market – with no cash reserves is not a great idea.
If I had listened to conservative advice I would have never bought my first place. In 2002, a real estate investor friend suggested that, on my then-$65K salary, I buy a $300K condo with $0 down and an 80/20-I/O loan. My family thought I was nuts and Steve, an uber-financially/politically-conservative friend said, “I think I’m going to throw up on your behalf…how can you stomach that kind of risk?”
However, I studied the MLS listings like my life depended on it and picked a place that needed some sweat-equity and was the least expensive condo in an nice area.
I chose a “roommate-friendly” layout (dual masters) and found a roommate to help me pay for a chunk of the monthly payment. When I sold the place in 2005, I made a nice profit, but I recognize that I took a gamble and was lucky with timing. Had I waited even 9 mos, I would have been in a different position.
Today, there is far less margin for risk (i.e. stupidity). I would never try to pull that NOW.
What has me the most worried about Carrie is that I dont think she’s truly making an informed decision, and expects her realtor, lender, etc. to look out for her interests and tell her what to do. I’m not sure she fully understands the process, the way it’s SUPPOSED to work, and that she doesnt have to buy THIS particular place just because her realtor tells her to.
I would have never agreed to pay $200K for the place. The Zillow bottom range estimate is about $170K. I’m not sure she ‘gets’ that she is probably paying too much.
She also had reservations about FHA loans because she suggested that “those loans are for poor people!”
